The average cost of a house in England will break through the £300,000 mark in the next five years, research suggests.
The NHF says 70,000 social homes need to be built each year
The National Housing Federation (NHF) warned prices were now almost 11 times the average wage and may rise by 40% as supplies fall further behind demand.
To avoid a looming crisis the NHF urged the government to act on its promise to build three million homes by 2020.
Recent rising interest rates and repossessions have led other analysts to forecast falls in house prices.
The NHF said a housing crash was unlikely despite first-time buyers finding it tougher to afford a home.
According to the report many of those priced out of the housing market are now turning to the social housing sector - as a result housing waiting lists have grown by 57% over the past five years to 1.6 million households - or four million people.
In the 10 years since Labour came to power house prices have surged by 156% while wages have risen by just 35%, research for the NHF carried out by Oxford Economics found.
If such trends continue, prices will near the half a million mark in London by 2012, from the current average of £318,864.
Even in regions traditionally regarded as cheaper - such as the North West and Yorkshire - average prices will break through the £200,000 level.
"Our report shows that continuing house price rises and the resulting housing crisis are set to stay with us for a long time," said NHF chief executive David Orr.
And while homeowners may view the surge in prices as good news, Mr Orr did warn they carried a "sting in the tail".
"A growing number of parents will find themselves subsidising their sons' and daughters' mortgages," he said.
"And, across the country, more and more people are going to find themselves priced out of the property market - and struggling to find a decent home."
In order to tackle the problem the government must press ahead as soon as possible with its plans to build more homes - and make sure an additional 70,000 social homes are built each year, the NHF report added.
The government vowed to act to tackle the country's property problems with the publication of the Housing Green Paper last month.
Among the proposals were plans for more than 70,000 affordable homes a year to be built by 2010/11.
The building drive aims to tackle housing supply problems - local government figures show there is demand each year for 210,000 homes, but only 165,000 are being built.